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Legal IssuesWhen a relocation company is involved, who owns it?
The PAR Legal Hotline regularly fields calls from REALTORS® asking what needs to be done to meet the disclosure requirements of the Sellers Disclosure Law. Under the law the seller is responsible for disclosing any known material defects affecting the property. Likewise, if a relocation company owns the property, it’s the relo company’s responsibility to meet the requirements.
Recently I worked with a client who signed an Agreement of Sale with a relo company to buy a home in the eastern part of the state. The buyers performed all due diligence and presented the relo company with a Reply to Inspections form within the appropriate time. The day before the seller’s response to the requested repairs was due, the listing agent mentioned to the buyer’s agent that the homeowner may want to back out of the sale because his employment status changed. At this point, the agent recommended that her clients contact an attorney.
Although the relo company signed the Agreement of Sale, we learned that the company did not own the property – the homeowner still owned it. The buyers had not been made aware of this fact. When they asked what it meant for them and their ability to force settlement, they were advised that the homeowners had no written obligation to perform. The homeowners had not signed anything between themselves and the buyer, thus there was no contract with the actual homeowner to enforce.
Fortunately, the homeowners were stand-up people who felt bad about the sudden turn of events. They not only immediately agreed that the deposit should be returned to the buyers but they also reimbursed the buyers for their out-of-pocket expenses incurred during the due diligence period. At the end of the day, both buyers and sellers were happy and the buyers are currently under agreement on a new property.
What should REALTORS® learn from this story? If you’re the listing agent for a relo company and said company is signing agreements with respect to property, make sure the company owns the property. If it doesn’t own the property, make sure any prospective buyers are aware of this before problems arise. If you represent buyers and know that a relo company is (or may be) involved, find out what its role in the transaction is or will be.
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About Brett: Brett Woodburn, Esq. is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees and representing and defending real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. He routinely counsels employers on employee relations issues as one of the voices of the PAR Legal Hotline. |
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Hi Brett
Thanks for both an informative and timely article, I say this because I am involved with a relo property and my dilemma is;
I was informed both verbally and an email telling me the relo company took title to the property,I have an executed agreement of sale with the relo company’s name as owner only to find out that they never took title, what position have I put myself in as a result of this.
I will add that I have consistently requested documentation asking for proof that they have taken title only to be ignorred.
Should this transaction fall apart for whatever reason I feel like I am the only one holding the bag? Any thoughts? And how do I protect myself in the future from this kind of situation,agent beware?
Thanks again,
Jim
Brett,
How would we, as agents working with buyers, know what kind of contractual agreements exist between seller and relocation company? What questions would we need to ask? I’m assuming there are a variety of documents that could be signed by sellers giving authority to relocation company to sign on their behalf. Is the relo company an equitable owner? What are the rights of an equitable owner in PA? The scenario you described seems unusual but then no two transactions are ever the same. Very thought provoking at least.
Brett
Great article! In a class I was teaching the other day, another issue with relo companies came up–which was the relo company receiving, accepting an offer but not returning the written contract for up to two weeks. When it comes back, the acceptance date is two weeks earlier, which may lead to buyer default if the buyer cannot start a loan application without the written agreement. Since delivery is vital, perhaps you and others could draft some language for these circumstances to use as an addendum, stating basically that the clock doesn’t start ticking until delivery.
Any time you introduce additional documents, such as a POA, it is prudent to have the document reviewed by an attorney. The rights conveyed by the POA may be limited, may reserve rights to the seller or may not be drawn in such a way as to meet Pennsylvania statutory requirements. It’s not always easy to determine who owns the property or who has the unilateral right to dispose of it.
Hi Brett:
This article raises a very important question: What about the relo company that has POA which is often the case prior to any relo or corporate client buy-outs?